Earlier this week, Johnson & Johnson
We're not talking about a large group of patients here. Schizophrenia usually develops in patients' mid-20s, and pediatric psychiatrists still debate whether most episodes of euphoric highs and depressive lows in children are really bipolar disorder, or just normal teen angst.
Risperdal brought in $4 billion in total sales last year -- some of which was probably off-label use by children -- so the new indication won't likely spur a major sales increase. Still, Johnson & Johnson will be able to market it to doctors, which might help it gain pediatric market share over lithium, the only other FDA-approved pediatric treatment for bipolar disorder.
Perhaps the approval's biggest advantage is that Johnson & Johnson will be able to target patients earlier than its competitors Zyprexa, made by Eli Lilly
Unfortunately, the kids will have to remember to take their pill every day. The every-other-week injectable form Risperdal Consta, developed in collaboration with Alkermes
The approval for the new indication won't trigger a pediatric marketing extension for Johnson & Johnson, because it already played that card last March, after the clinical trials in children were completed. That move extended the drug's marketing exclusivity from this December's pending patent expiration date until June of 2008.
Johnson & Johnson will likely be hit hard next year when generic versions or Risperdal hit the market. An 80% drop in branded drug sales isn't unheard of when generic competition begins. The new pediatric indication is kind of like using a Dixie cup to add water to a swimming pool with a 3-foot-wide sinkhole at the bottom. It'll add a little bit of revenue, but nothing will stop next year's plummeting sales.
Johnson & Johnson and Eli Lilly are both picks of the Income Investor newsletter. If you'd like to seem more ideas for stocks that pay dividends, grab a 30-day free trial of the newsletter and check all of our past recommendations.